Ranking The World's Most Sustainable Companies

I cover entrepreneurs, focusing on global and social entrepreneurship.

Over the past decade, "sustainability" has become a popular corporate buzzword with a nebulous definition. To most people it connotes an abstract sense of do-gooding that centers on a company's effects on society and the environment. A Toronto media company called Corporate Knights has tried to make the idea clear and measurable by collecting data on 3,000 global public companies and evaluating them according to 11 different metrics. Today, as a result of that research, it published its first-ever ranking of the world's 100 most sustainable companies.

Corporate Knights' editor-in-chief Toby Heaps says that to be considered sustainable, companies must "squeeze four times more wealth out of every resource they use." Heaps announced the list at Davos, where his company is hosting a dinner for the financier George Soros.

Corporate Knights worked with a research firm to winnow down its list of publicly traded companies from 3,000 to 300, based on financial performance and other criteria. Then the Corporate Knights research group worked with two different asset management firms to evaluate those 300 companies based on 10 environmental, social and governance performance metrics, including energy productivity, waste productivity and CEO-to-average-worker pay ratio. An 11th indicator was added for "transparency."

Corporate Knights relied on the companies to give it accurate data. When a company wouldn't provide information for one of the 10 metrics, Corporate Knights assigned it a null score for that category and then penalized it with an unfavorable transparency score.

The 10 most sustainable companies include
General Electric
, Pacific Gas and Electric, TNT NV, Hennes & Mauritz,
Nokia
,
Siemens
,
Unilever
,
Vodafone
,
Smiths Group
and Geberit. The top two companies are American, but Great Britain has the most on the list of 100, with 21.

There are also 12 companies based in the U.S. and nine in both Australia and Canada. Heaps says that overall he found a "European bias," which he credits to Europe's having a developed society on limited land, which has forced European companies to learn to be efficient with their resources. He says that Europeans also perform well in the category of CEO-to-average-worker pay, because they don't give out huge stock bonuses. He adds that many Japanese companies, five of which make the list, are as efficient as their European counterparts, but they lose points for leadership diversity because of a lack of women in their senior ranks.

The mining giant
Rio Tinto
didn't make the list, unamazingly, but neither did
Whole Foods
or
Google
. Heaps says Google was shut out of the top 100 because of privacy concerns and issues related to its China operations. Eco-smug Whole Foods lost points for being non-union and for its history of labor disputes.

Heaps says he believes that consumers and investors will be less jaded about sustainability if companies are more transparent. "One of the things that have held back the sustainability movement on Wall Street is that on many of these issues, companies operate in a black box," he says. "You need to have transparency if you want people to take you seriously. Then you can get beyond platitudes and discuss issues that people really care about."